Smith-Midland Announces Second Quarter 2018 Results

August 02, 2018 08:12 AM Eastern Daylight Time

MIDLAND, Va.--(BUSINESS WIRE)--Smith-Midland Corporation (the Company) (OTCQX: SMID), which develops,
manufactures, licenses, rents, and sells a broad array of precast
concrete products for use primarily in the construction, transportation
and utilities industries, today announced results for the quarter ended
June 30, 2018.

Second Quarter 2018 Results

The Company reported revenues of $9.83 million for the second quarter
2018, as compared to $10.73 million for the second quarter 2017. The
pre-tax income for the second quarter of 2018 was $0.92 million compared
to pre-tax income of $1.07 million in 2017, a decrease of $0.15 million.
The Company had net income for the second quarter of 2018 in the amount
of $0.69 million compared to net income of $0.71 million in 2017, a
decrease of $0.02 million. The Company had an income tax expense in the
second quarter 2018 in the amount of $0.23 million compared to income
tax expense of $0.36 million in 2017, with a 9% rate decrease in 2018
due to the Tax Cuts and Jobs Act.

First Half 2018 Results

The Company reported revenues of $18.96 million for the first six months
of 2018, as compared to $20.23 million for the first six months of 2017.
The pre-tax income for the first six months of 2018 was $0.36 million
compared to pre-tax income of $2.42 million in 2017, a decrease of $2.06
million. The Company had net income for the first six months of 2018 in
the amount of $0.27 million compared to net income of $1.57 million in
2017, a decrease of $1.30 million. The Company had an income tax expense
for the first six months of 2018 in the amount of $0.09 million compared
to income tax expense of $0.85 million in 2017, with a 10% rate decrease
in 2018 due to the Tax Cuts and Jobs Act.

CEO Commentary

Ashley Smith, CEO, commented, “The Company rebounded strong in the
second quarter, from the first quarter of 2018, with major improvements
in royalty revenues and gross margins. The accounting treatment for the
guaranteed buy-back on our largest barrier order ever continues to
impact current quarterly earnings as the deferral amount increased to
$3.7 million. The Company began shipping product to the jobsite during
the second quarter and expects full delivery of the order by the end of
2018. During this time period we will begin recognizing the revenue for
this sizable project, which is expected to be completed in 2022.

“The Company’s backlog remains steady at $35.3 million to support sales
into 2019. The current backlog does not include a major SlenderWall
project, in which the Company is currently producing with month-to-month
purchase orders as the contract is in the late stages of negotiations.
This project will help showcase our ability to produce large-scale,
design build, high-rise buildings to major developers and architects.

“Easi-Set Worldwide, our licensing company, had one of its strongest
quarters ever. As we expected, infrastructure spending has increased and
our innovative precast concrete products continue to be the most widely
used and trusted products in the country. We are expecting 2018 to
finish strong, as we continue to focus on increasing our licensee base.

“Our margins in the second quarter of 2018, not including royalties,
improved to 26% from 23% in the comparable prior year period and 15% in
the first quarter 2018, mainly as a result of a decrease in labor costs.
This was paired with increased production at the Virginia and North
Carolina plants to produce favorable results for the quarter. Our
management team was also able to hedge against increases in certain raw
material prices through the bidding process to benefit margins. We still
struggled at the South Carolina plant during the second quarter, but
these issues should be behind us for the third and fourth quarter of
2018. Management continues to work hard on reducing labor costs as we
focus on lean manufacturing processes to eliminate waste, improve
efficiency, and drive value to the customer.

“We continue to be excited about the expansion in North Carolina.
Substantial completion of the building is expected by the end of the
first quarter 2019 with manufacturing expected to begin during the
second quarter 2019 at the new facility. The expansion is allowing us to
bid on much larger projects that we were not able to quote in the past
due to capacity issues.”

This announcement contains forward-looking statements, which involve
risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking
statements. Factors which might cause such a difference include, but are
not limited to, product demand, the impact of competitive products and
pricing, capacity and supply constraints or difficulties, general
business and economic conditions, the effect of the Company's accounting
policies and other risks detailed in the Company's Annual Report on Form
10-K and other filings with the Securities and Exchange Commission.

For more complete information on Smith-Midland Corporation, visit the
Company’s web site at SMITHMIDLAND.com. The “Investor Relations” area
will include the Company’s Form 10-K.